Meaning & use
equity instrument
Last updated
Meanings
nouncountablefinancebusiness
A financial asset that represents part ownership of a company, such as a share of stock.
Grammar: Countable: you can say 'an equity instrument' or 'equity instruments'.
Patterns
- issue an equity instrument
- hold an equity instrument
- trade equity instruments
The company issued equity instruments to raise money for expansion.
Investors who hold equity instruments may receive dividends.
Equity instruments give the holder a claim on part of the company's profits.
nouncountablefinancebusinesstechnical
A contract that can be settled by delivering a company's own shares, often used in accounting.
Grammar: In accounting, the term can include more complex contracts, not just simple shares.
Patterns
- classify something as an equity instrument
- account for an equity instrument
Under the new rules, the convertible bond was classified as an equity instrument.
The accountant explained how to value the equity instrument on the balance sheet.
Word forms
| plural | equity instruments |
|---|
Common combinations
- issue equity instruments
- The startup issued equity instruments to attract investors.
- hold equity instruments
- Many pension funds hold equity instruments for long-term growth.
- trade equity instruments
- Traders buy and sell equity instruments on the stock exchange.
- equity instrument market
- The equity instrument market was volatile last quarter.
Synonyms and how they differ
- share
- A share is a specific type of equity instrument; 'equity instrument' is broader and more formal.
- stock
- Stock is often used in American English for shares; 'equity instrument' is the technical accounting term.
Opposites
Word family
- equity noun
- Ownership value in a company, or fairness.
Commonly confused: equity instrument or debt instrument?
equity instrument vs debt instrument
A debt instrument is a loan, like a bond, while an equity instrument represents ownership.
Practice
Which of the following is an example of an equity instrument?
Choose one answer.
A share of stock represents ownership in a company, so it is an equity instrument. A government bond is a debt instrument, not equity.
Make it your own
Write a sentence using “equity instrument”, then check it and compare it with the examples above.